What’s a ’fair‘ late tax fee, asks council

He told the City Council Monday night that if they’re late on a mortgage payment, they can expect to pay a penalty based on that single payment, not the outstanding balance of their mortgage.

Yet, he noted, if a property taxpayer is late on a quarterly payment, they are charged interest on the full amount of the taxes due.

“This is totally unfair to me,” Ladouceur said.

Saying he knows of no other municipality using a similar system, Ladouceur has introduced legislation that would apply a late interest fee to the quarterly payment due only.

While that made sense, Council President Donna Travis wanted to know what the city would lose in revenue and Ward 4 Councilman Joseph Solomon questioned if the city is bound by state statute to apply the charge.

There was no immediate answer to Travis’ question. John Harrington, solicitor for the council, didn’t see any restriction to changing the ordinance other than it couldn’t take effect until the upcoming fiscal year.

Solomon pointed out that the change would mean a loss of revenues.

“If we cut taxes in one area, then we’re going to have to get the money somewhere else,” he said.

Ward 9 Councilman Steve Merolla made two observations. He pointed out that he authored in 2001 what has become known as the “good tax law” that waives late fees provided the residential taxpayer pays the tax in full and has not been delinquent on payments for the last five years. The maximum allowable waiver in penalty fees is $500, which is made in the form of a rebate, if approved, when the full tax and penalty is paid.

He also said that taxes are due at the time they are levied in July and that the city allows for quarterly payments at no added cost if made on time.

That didn’t satisfy Ladouceur.

“It makes no sense having a line item in the budget based on being late [in paying taxes].” He said, in effect, the city is “encouraging” people to be late so that it can rake in the penalties. Late payments carry a 12 percent penalty. The budget line item for interest earned on tax payments is reportedly $1.3 million.

It is not known how much that might drop if instead of being charged on the full amount of taxes due, the penalty was restricted to the amount of the quarterly payment.

“To whack them on the full amount due is pathetic,” said Ladouceur.

Solomon questioned the amount of the lost revenues and how it would be made up.

“I don’t want to prey on the misfortunes of anyone,” he emphasized.

Yet, he wanted an answer.

“It’s a point of information,” he said, “What’s going to happen when we pull the plug?”

Ladouceur agreed to hold the ordinance for a week so that the city could provide estimates on lost revenue.

Ladouceur didn’t offer specific suggestions on how any reduction in revenue could be made up. Regardless, he feels over penalizing taxpayers is not the way to go.